4 tips for financially surviving a Florida divorce
Divorcing spouses should avoid driving up legal costs, forgetting taxes, skipping long-term financial planning and pursuing assets with hidden expenses.
In 2015, the Florida Department of Health reported that the state’s divorce rate was on the decline. That year, the percentage of divorces relative to the population hit its lowest mark in more than 55 years, according to WCTV. Still, despite this gain, the risk of divorces may still be significant for local couples, as Florida sees a higher rate of divorces than the rest of the U.S.
For the many state residents who navigate this process each year, the associated financial challenges are not trivial. Divorce can introduce immediate legal expenses, increased living costs and numerous other financial hurdles. This makes it essential for spouses in Florida to understand how to reduce their risk of financial distress both during and after divorce.
1. Plan realistically
People who are eager to end the divorce process may focus only on the short term, without weighing the long-term impacts of their financial decisions. It is critical for divorcing spouses to realistically evaluate their income, assets and likely future expenses. Keeping in mind that costs such as insurance and rent often rise post-divorce, spouses should make a working budget. This can help spouses know how much financial support or liquidity they may need immediately after the divorce and during the following years.
2. Choose assets carefully
Spouses similarly should be careful to avoid making emotional or short-sighted choices when deciding which assets to pursue during marital property division. It is not uncommon for spouses to want to keep assets with sentimental value, such as the marital home. However, this can cause a spouse to lose out on other valuable property, such as retirement accounts or liquid funds. Furthermore, many spouses may overlook the hidden costs of emotionally meaningful assets, such as the time and money needed to maintain and insure a house.
3. Remember taxes
Different divorce settlements can carry markedly different tax implications. Therefore, it is crucial for spouses to account for the taxes associated with the following assets or forms of financial support:
- Real property
- Investment and retirement accounts
- Temporary or long-term alimony
Oversights on this front can be costly, as The Wall Street Journal points out. For instance, a tax-deferred retirement account and an account funded post-tax may have the same apparent value, but the true worth of the first account will decrease significantly when taxes are eventually taken out.
4. Pick battles wisely
Many people may hurt themselves financially by deliberately prolonging divorce-related disputes to get back at the other spouse, according to USA Today. It is important for spouses to protect their financial interests and seek a reasonable settlement. However, excessive or unreasonable fighting serves only to reduce the amount of money that is left for both spouses to divide.
To avoid the many common financial pitfalls associated with divorce, spouses should seek the assistance of an attorney. A lawyer may be able to help a person evaluate his or her long-term needs and goals, then pursue a settlement that meets those objectives.